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Home Marketing B2B Marketing

Many brands are ‘reluctant buyers’ of ads on retail media networks

February 7, 2023
in B2B Marketing
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  • While marketer interest in retail media networks shows no signs of slowing, 88% of brands feel they are somewhat or heavily influenced by retailers to buy advertising on their networks, according to a report by the Association of National Advertisers (ANA).
  • Further, 42% of advertisers report questioning their investments in retail media networks, viewing it as both a valuable advertising tool and a cost of doing business. A lack of both measurement standardization and transparency present additional challenges. 
  • Despite hesitations, 56% of respondents are working with at least five retail media networks and the majority expect to both use more and spend more within the next two years, viewing the strategy as both recession proof and less prone to budget cuts.

Retail media networks have quickly risen to become one of advertising’s shiniest toys, predicted to reach an ad revenue of $52 billion this year and $61 billion in 2024, according to eMarketer data cited by ANA. However, not all that glitters is gold, as evidenced by the marketers who report having underlying concerns with their retail media bets.

Among issues, perhaps most notable — and expected — are suggestions of a toxic relationship between advertisers and retailers, with brands viewing retail media networks as a “have to buy” versus a “want to buy,” per the ANA report, titled “Retail Media Networks: A Forced Marriage or Perfect Partnership?” The report’s characterization of marketers as “reluctant buyers” is supported by the high percentage of brands who report they are somewhat or heavily influenced by retailers to invest in advertising on their media network, with one respondent noting that “it’s a power struggle right now.”

Indeed, retailers continue to push efforts to build out their networks in the chase for ad dollars, with companies like Lowe’s in-housing retail media efforts in the name of efficiency and others banding together for an expanded digital footprint, as seen with the Kroger-Albertsons merger. However, as retailers sell more ads, power-balance concerns by marketers are mirrored beyond ANA’s findings, signifying growing pains that could prolong retail media’s maturation.

Still, the issues have not proven detrimental at this point, with retail media networks being considered foundational platforms, praised for being viewed as a way to counter potential shifts by shoppers to store brands and less prone to macroeconomic impacts. ANA’s report, conducted last summer, surveyed 138 of its members, 80 of which use retail media networks.

While the majority of respondents currently work with five or more retail media networks, 40% report using between five and nine and 16% say they are using at least 10. In the next two years, 58% of advertisers predict they will utilize more retail media networks than they are now and no advertisers believed they would be using less than what they use today. The timeline coincides with the expected end to third-party cookies by Google in 2024, which could partially explain why bets might rise. 

As retail media networks grow up, another concern to be addressed is a lack of standardization across platforms, which is the biggest problem brands face as 57% of respondents say they feel this way and cite difficulties with cross-platform comparisons as the driver. The second biggest challenge, reported by 44% of marketers, is walled-garden environments, with some noting they were “driving blind” when it came to enhancing the deployment and results of various activations. Combined, the two concerns are what’s blocking brands from fully optimizing investments with media networks, per the report.

The majority of respondents also noted their retail media budgets are not incremental, instead being funded from existing advertiser budgets, with a major fear being that budgets used to drive brand growth for new customers are instead being used to fund sales from existing and known customers, challenging networks to prove how they can drive long-term growth over short-term success. 

“If we just keep reaching the people who browsed our pages before, bought our products before, we’ll never grow our business or bring new people in,” another respondent wrote.

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